Directors as occupiers under ESI law may face personal contribution liability, while relief-undertaking protection does not suspend it.

Directors of a public limited company may be treated as the occupiers of the factory under the Employees' State Insurance Act, 1948 where they exercise ultimate control over its affairs, making them principal employers and personally liable for contributions. The Bombay Relief Undertakings (Special Provisions) Act, 1958 protects the undertaking from enforcement but does not suspend the directors' independent statutory liability. However, any recovery demand must relate only to the period when the petitioners remained directors, so the contribution had to be recalculated and a fresh demand issued for the correct period.

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Issues: (i) Whether the directors of a public limited company are the principal employers within the meaning of the Employees' State Insurance Act, 1948 by reason of being occupiers of the factory. (ii) Whether the notifications under the Bombay Relief Undertakings (Special Provisions) Act, 1958 suspended the directors' individual liability and whether the demand could be enforced for the period after they ceased to be directors.

Issue (i): Whether the directors of a public limited company are the principal employers within the meaning of the Employees' State Insurance Act, 1948 by reason of being occupiers of the factory.

Analysis: The definition of principal employer under the Employees' State Insurance Act, 1948 incorporates the meaning of occupier from the Factories Act, 1948. The expression occupier means the person having ultimate control over the affairs of the factory. A company's board of directors exercises control over the day-to-day affairs of the company and, for the purpose of contribution under the Act, that control extends to the obligation to pay employer's and employees' contributions. The Act being beneficial legislation, the directors were held to fall within the expression occupiers and therefore within the category of principal employers. The reliance on the penal provision in the Factories Act did not alter that conclusion.

Conclusion: Yes. The directors were principal employers and were personally liable to pay the contributions under the Act.

Issue (ii): Whether the notifications under the Bombay Relief Undertakings (Special Provisions) Act, 1958 suspended the directors' individual liability and whether the demand could be enforced for the period after they ceased to be directors.

Analysis: The moratorium under the Bombay Relief Undertakings (Special Provisions) Act, 1958 protected the undertaking from enforcement, but it did not suspend the independent liabilities of the directors. However, the demand had to correspond to the period during which the petitioners remained directors, and the respondents accepted that the amount should be recalculated and a fresh demand issued for the correct sum. That limited objection was accepted, while the broader challenge failed.

Conclusion: The suspension plea was rejected, but the demand required correction for the period after the petitioners ceased to be directors.

Final Conclusion: The petition was substantially unsuccessful, and the validity of the recovery proceedings was upheld, save for the direction that the employer's contribution be recalculated with a fresh demand confined to the proper period.

Ratio Decidendi: For purposes of the Employees' State Insurance Act, a company's directors may be treated as the occupiers of its factory if they have ultimate control over its affairs, and a relief-undertaking notification does not suspend their independent statutory liability.

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